RILA Conference

Colorado eFairness

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Colorado.In 2010, Colorado revised
tax statute 39-21-112 to require online retailers without a physical presence in the state either (1) to collect and remit taxes on their transactions into the state or (2) to notify (a) consumers of their obligation to remit tax on their purchases and (b) the state taxing authorities of those in-state residents that had made significant purchases from the remote seller. The Direct Marketing Association (DMA) challenged the rule on behalf of its members. After a complicated procedural history, the US Supreme Court granted certiorari in
Direct Marketing Association (DMA) v. Brohl [Brohl I] to consider an ancillary Tax Injunction Act (TIA) issue. Justice Kennedy, who agreed with the majority opinion, took the opportunity to write a separate concurring opinion highlighting the problems that the Supreme Court's decisions in
Quill and
Bellas Hess were visiting on states, as well as the uneven playing field for brick and mortar retailers.

The case was remanded and ultimately considered by a 10th Circuit panel that included now-Justice Neil Gorsuch. The 10th Circuit held that the Colorado notification law did not run afoul of
Quill's physical presence requirements because the Colorado law gave remote sellers the option of notifying consumers and the state rather than requiring collection and remittance. Then-judge Gorsuch agreed with the majority but took the opportunity to issue a concurring opinion that echoed the challenges highlighted by Justice Kennedy, for whom he had once clerked.

Despite the fact that DMA petitioned the Court for certiorari and Colorado filed a cross-petition for certiorari expressly asking the Court to take up the
Quill question, the Court declined to hear the case[1], which means that the Colorado notification law is good law, and Colorado began enforcement on July 1, 2017.

[1] Although the Court rarely explains why it does not grant certiorari and did not do so here, it may be because, as Justice Kennedy said in his concurrence
Brohl I, "[T]his case does not raise this issue in a manner appropriate for the Court to address it." As then Judge Gorsuch explained in his 10th Circuit concurrence, the Colorado law was intended to and does skirt the
Quill question and thus does not serve as a good vehicle for the Court to consider whether or not
Quill is still good law. And, as the SLLC amici brief stated, "DMA's
own framing asks for (1) splitless, (2) factbound, (3) error correction, to avoid (4) a technical rather than substantive injury to the plaintiff caused by (5) a unanimous decision applying (6) settled law in (7) a novel context that (8) the Court will have every opportunity to review after appropriate percolation…. That is a weighty tally against certiorari."